The Ramsey Show - App - Develop a Taste for Living in Reality (Hour 2)

Episode Date: May 27, 2020

Savings, Career, Debt, Retirement Tools to get you started:  Debt Calculator: http://bit.ly/2QIoSPV Insurance Coverage Checkup: http://bit.ly/2BrqEuo Complete Guide to Budgeting: http://bit.ly/2QEyonc Interview Guide: http://bit.ly/2BuGnZE Check out other podcasts in the Ramsey Network: http://bit.ly/2JgzaQR 

Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. My co-host today on the show, Rachel Cruz, Ramsey personality, multiple number one best-selling author, and also my daughter, answering your questions today. The phone number, 888-825-5225, that's 888-825-5225. Starting off this hour is John in Virginia. Hey, John, welcome to the show.

Thank you, sir. Thank you for having me. How are you? Better than I deserve. How can we help? Is there some point where it's all right to put your emergency fund into a non-retirement investment so that it can earn money for you instead of just sitting there? And I understand the importance of an emergency fund. I've had one my whole life. I've had one my whole life.

So what's your nest egg? Right now, my worth is $1,198,000 is what I'm worth. So how much is in your emergency fund? I was keeping $20,000 in my emergency fund because I don't have any debt right now. My house is paid off and everything. Are you married? I'm keeping $20,000 in there. Are you married?

I used to keep more. I am not married, no sir. Okay. So a single guy. And you're how old? Single guy, yes. I'm 56 years old. Okay.

Mathematically, the risk you're taking is how much the market might fluctuate when you needed $20,000 to do X, Y, or Z. And the market is down 10%, so it might cost you $2,000. The market's down 20% like this fall or this spring, and it would cost you $4,000. So would that bankrupt you with a $1.1 million net worth? No. But that's the reason we keep it handy. and it would cost you four grand. So would that bankrupt you with a $1.1 million net worth? No. But that's the reason we keep it handy. The other reason we keep it handy is emotional.

Right, Rachel? Yeah, I think just having it on hand versus having to go and take it out of investment. It's just liquid. It's right there. If it's in a money market account, a savings account, you can get to it. And I always tell people that your emergency fund, it's like insurance. It's not an investment. And so I understand that mathematically you feel like you're possibly losing what it could grow to putting it in the market.

But I think just having it handy and considering your net worth, it's not going to change your world either way. And I would still just keep it liquid, keep it handy. So if you did need it, you could just pull it right out and you're not worried about having to check on it and know that your emergency fund possibly went down. Here's the thing that happens sometimes, and I'm not accusing you of this, John, but, you know, we've got 17 million people listening to this conversation. So here's what happens to some people sometimes. Let's say you put it into the market, okay? You put it in a mutual fund. And let's say the market was down, and you needed $10,000 for whatever. Let's just make up an emergency, okay?

A lot of people would go put that on a credit card to keep from cashing out the investments while it's down. Gotcha. And obviously, that's when I would get my gun out. Right. Like, no! Okay, so that's one of the dangers. But there is something about having a solid foundation, and the emergency fund's purpose is not really to make you money.

It's insurance. Insurance costs you money to protect the things that you have. But Rachel's right. Either decision you make is not going to break you. But just don't allow this to cause you to rationalize another step and say oh i'm not taking that money out i'm just going to fix the transmission in the car with a credit card i'll pay it off later uh no we're not going that route uh because you just all that just because you didn't keep it liquid so i keep mine liquid i have an added reason to

do that though uh my wife after us going broke as a stipulation of staying married to me, is we have an emergency fund, and we don't even touch it for emergencies. And she's rightfully so, is scarred, and rightfully so is hardcore about that. And that's, in a married couple, it makes a big difference, right? Well, it does. For women, the number one financial fear for women in america is the lack of security and so feeling like you're not secure is that fear that comes in and plays into your emotions and it's amazing we always say this but after baby step three after you've paid off all of your debt you have a fully

funded emergency fund you're in a totally different place emotionally spiritually financially i mean everything is so different when you don't have payments and you have three to six months saved in the bank and it's there. You can get to it if you need it. It's just, it's accessible. It's right there. I mean, like that's what it's for. And then you go on and invest, you know, your 15% retirement, you, you know, you start working down the line. Um, but for sure, I at least could speak for the women because I'm that same way I'm like just knowing it's there and even it's funny I'll even you know talk to when someone be talking about money I'm

like okay so how much is in our money market account because we'll save we have our emergency fund and one fund there and then we will put other savings in it for short-term savings and he'll say a total and I'm like okay yeah yeah and I'm like but does that that doesn't include the emergency fund right and he's always like Rachel I never include the emergency fund because we're not touching it so it's like that like we don't even pretend like it's there it's just like yeah it's there and we don't i don't even pretend it's there because i don't even want to think about it it's like if we absolutely have to have it we'll go to it but so john you've done such a good job with money congratulations you're an everyday millionaire and you're going to be just fine

whichever decision you make on this the downside you've got is don't let it force you into bad habits, number one, like taking out a credit card debt to keep from cashing out investments while they're down. You know, number two, you're not going to make enough on the account by investing it to make much difference in your situation, and you're not going to lose enough by not investing it to make much difference in your situation. So, you know, you're talking about $1,000 to $2,000 a year, you know, and it's just, in your world, that's a small amount of money. It doesn't feel like it when you say it that way, but it is, you know, considering you have a $1.1 million net worth.

Well done. Very well done. Open phones at 888-825-5225. And, Rachel, when you and Les Parrott are doing the money and marriage events, you all get into the emergency fund and that content? Yeah, I do. When I talk about financial fears and ways to overcome them tactically, the emergency fund plays into a lot of those fears if you have that in place. Over the years of leading financial peace back,

especially when I used to lead those classes personally live, I was the coordinator. I was the small group facilitator. I have watched over the period of time, the number of weeks, you know, nine weeks, 13 weeks, it used to be in the old days uh a couple come into that class and how a wife feels so different when that emergency fund is finally done and if it happens during that 13 weeks that they're in there just the way she looks at her husband i mean it's it's you know and people go well you're being sexist no it's it's an observation of human nature i mean you can call it sexist misogynist or whatever crap you want to dream up with on twitter but the bottom line is that i've observed this thousands of times uh it's an observable human trait now is that true of every single woman or every single

man no and some more than others yes i'm sure there's a spectrum but it's an observable thing that their marriage is impacted because ladies relax yeah well les parrot has a assessment with marriage that he's done with couples millions millions of couples all over the country and uh when we when we built out the money of marriage event him and i you know talked obviously with content and all that and so i pulled some of those stats because he had it and out of all all the millions of Americans that took it, the women, again, I said earlier, but it's true, the number one financial fear beyond anything else for women was the lack of security.

Yeah. And so. So it's there. So yeah, you feel insecure. So his survey is misogynist, I guess. Right, right. What a bunch of crap. No, but it's true.

It's the fact, I mean, not every woman, but a lot. Rachel Cruz feels great when I have an emergency fund. I can just tell you sharon remsey feels more than great it's just a dadgum requirement so there you go folks since you're spending more time at home these days why not make the most of it now i know not everyone has the means to do a full, but thanks to our friends at blinds.com There are some small changes you can make to help improve your home blinds.com makes it incredibly simple to shop Top quality blinds shades and interior shutters from home with easy online

Ordering and free shipping right to your door. Listen, window treatments are a simple project that you can do that really benefits the look and feel of your home. And if you're nervous about doing it yourself, well, don't be. Blinds.com has helped millions of homeowners through the process with free design help by phone or online, plus they guarantee the perfect fit for your windows. Go ahead and get started today. Go to Blinds.com to take advantage of this week's special offer. Rules and restrictions apply. Maya is with us in Texas. Hey, Maya, welcome to the Dave Ramsey Show.

Hi, guys. I'm so excited to speak with you all. You too. What's up? Okay, so I'll try to get to it quickly. So I was recently furloughed from my job,, uh, like two weeks ago, a guy hits me and he totals my car. So, um, I had full coverage insurance on it and I wasn't hurt or anything like that. And, um, after, yeah, after the settlement, I got back like $9,900 and I owed

71 85. So that leaves me with about like close to like 22,700. So I don't really know what to do. Like, should I get like another car that's the same value as my car? Because I do have money in savings because of like this whole Corona stuff. I was like a little nervous. In savings, I have about like $6,000. So like I was thinking like maybe getting like a $6,500 car. I love it. So that was like, okay. And you got no payments. Yeah, I have no payments.

So the only thing I have to pay is my student loans. But I was talking, I'm going to be when I'm. No, we lost her. You're cutting out, kiddo. Are you still there? Can you hear me? you just came back yeah so you you so you're you got rid of a car payment by being by having your car totaled is what it sounds like that sounds good exactly yeah yeah so i'm just trying to see because i'm going to be one of those people that ends up getting more um making more money from unemployment than like my

job that i got let go from and before i got got let go, I was able to put, like, $1,000 towards my student loans. And I know now that I'm, like, let go, I can't, like, you know, I'm stopping the baby steps. Right. Is it, like, smart for me to just get, like? You're cutting out, kiddo. So I guess, you know, what we're going to say is just say what we said. The $6,000 car sounds good, and I would not pay extra on anything until you get reemployed. Your unemployment is going to run out the end of July, and you're going to be on the street.

So you need to line up a job. And don't wait around. Now is the time to do it. Go ahead and, yeah, job search, figure it out, get that income coming in. And that is a hard thing. I've heard that from a lot of people, how they're getting more from unemployment than what they were being paid originally. And it's tempting, right? Obviously taking it and kind of kicking back and be like, well, this is kind of nice.

I'm getting paid more. But then all of a sudden, July is going to be staring at you. That's it. That's what I was going to say is that time flies before you look up. But yeah. And if you're going to get behind, it's like, no. So staying ahead and being proactive instead of reactive when July comes is the key. And, you know, Ken Coleman and I were talking about this.

We've got about 40 million people out of work. A large portion of them will just go back to their jobs. Yeah, I saw a stat of that. There was a study that came out on that, and I want to say it was close was close to 83 i mean it was something insanely high that will go back but if you do not go back and you do not go back into the workforce as things open up there's going to be a large number of people chasing the jobs that are left the new jobs are the jobs that are open uh there's gonna be a large number of people unemployed people chasing those and you don't want to wait until july 25th to chase down one of those jobs because there's

going to be a whole bunch of people that coast out to the end there and then they go oh crap i got to get a job and then you're competing with all of them yeah all at one time uh like so the first two weeks of august is not a good time to be looking for a job when it runs when the unemployment benefits run out july 25th and because a good time to be looking for a job when the unemployment benefits run out July 25th because there's going to be a flood of humans out there doing this. So it's a good idea, even if you make a little less, to go ahead and get employed and stop the unemployment sooner rather than later. And as soon as you do get stabilized, then you push play again on your baby steps

and you get rolling again. Jesse's with us. Jesse is in Idaho. Hi, Jesse. How are you? I'm doing good. How are you doing, Dave? Better than I deserve.

What's up? Okay. So we make $95,000 a year. Me and my wife both put in 10% to our Roth 401K, which is matched. And then we have another Roth IRA that we put $5,000 in every year. Our cash flow IVF, it was all being in twin babies. Yay! We had them when we were 42.

So we had them when we were 42. What I was wondering is, would it be better to put $2,000 each into an ESA or with the extra $5,000 in my wife's IRA, do that instead for their college plan. Are you out of debt except your home? Yes, we're on baby step six. Okay. Well, baby step four is what?

Say 15%, which we're doing 10% each in our 401k. I would do 15% total. Okay. 10 in the 401kss? I would do 15% total. Okay. 10 in the 401Ks and 5 into Roth IRAs. Then I would do kids' college. And then if I can find some money after that, I'll go ahead and work on Baby Step 6. Okay.

But for the kids' college, would it be more important to put in ESA? Or since I'd be able to cash out the Roth because I'll be over 60? over 60 no you don't use ross for college don't go to school we don't use ross for college i'm going to use 529s or esas for college one of the two but if you want to put more in because you're doing this you can do that um here's what's going to end up happening you're going to have plenty of money for both things because you're concentrating on it and you're thinking about it. But, you know, it's a bad practice to have as your game plan using your retirement funds for your kid's college. Yeah, I mean, that's why, obviously, it's a totally different step just to make sure that your kids, they have the money for it if

you're on the step and you're not a bad parent for not paying for your kid's college if you're listening and you have a high schooler you're going to be graduating soon and going off to college and you have nothing saved, not a bad parent. But he is at such a great position. Jesse is. I mean, doing the stuff, little kids, no debt, emergency fund. Yeah. Then throw two thousand in an ESA. Or more into a 529. Either one's fine. But let's go ahead and stay at 15%, which in your case is going to be in the neighborhood of $15,000 going into retirement, not more. And then let's get the college funding at an amount where you feel good about it. $2,000 each is fine or more.

You want to do $5,000 each. I don't care. Whatever you want to do. And then you find more money in your budget past whatever you dictate for college then you go on to the um i'll go on to baby step six and start paying down the house at that point up next is going to be marcus in texas hey marcus welcome to the dave ramsey show hi how's it going dave better than i deserve what's up um i got about $67,000 in student debt. I got about $90,000 in my 401k. I was thinking about pulling out a chunk to maybe pay some of that student debt off.

I know I have to pay a 10% penalty and taxes, but I'm going to have to pay taxes anyway, correct? Not if you're at retirement age and you cash it out then, if it's a Roth 401k, the growth on it. Okay. So no, Marcus, yeah, we would not suggest pulling money out of the 401k. The only time you take money out of retirement is to avoid a bankruptcy or foreclosure and just to work the baby steps. If you have multiple, or the Zet Snowball,

if you have multiple student loans, list them smallest to largest and start knocking them down that way. No, I would not take retirement out to pay off this debt. What's your household income? It's around $100,000. Okay. And you have $60,000 in student loan debt. Is that the only debt you have other than your home mortgage?

And I have my truck parent, but that's... How much do you owe on your truck? I think about $12,000 left. Okay. So you have $72,000 to pay off and you make $100,000, right? Yes, sir. So if you did it in two years, that would be $36,000 a year? Yes, sir. Which means you're on beans and rice. Gotcha. And that's what I would do and not destroy your retirement

and just clean it up as fast as you can. That's what we've taught folks all these years. Let me do this. You said you're married, right? No, sir. And the free trial is booming. And what it'll do is we can get you in there and you can start watching the Financial Peace University lessons and you'll see why we're laying all this out exactly this way. It's a very clear, calm, simple to understand, hard to do process from being where you are to being a millionaire. And I can show you exactly how to do it. So hang on. Kelly, I'll help you get signed up for the 14-day free trial. By the way, folks, you can do that at DaveRamsey.com slash hope. And we started this during the pandemic shutdown,

and we're just continuing to do it right now. It's an incredible opportunity for you. Do you know who is a prime target for identity theft? Your children. Kids have no debts or credit history. Their personal information is just as easy to get, but the theft could go completely undetected for years. Every day all over the country, young adults are starting down their own path in life by opening a bank account or renting their first apartment, only to find out that they somehow

already have credit card debt, a mortgage, or even a criminal record. It's devastating, but it can be fixed when you have an ID theft protection plan from Zander Insurance. They monitor all personal info for the entire family, and they take over all the work if you become a victim. Best of all, your kids are covered for free on their family plan. Call them at 800-356-4282 or visit zander.com. It's just the smarter, more affordable way to protect your entire family. And it's the only plan I provide to my team. Zander.com or 800-356-4282.

Oh, people are in the lobby. Humans are in the lobby of Ramsey Solutions. It's a good thing. And humans are on the debt-free stage, which is even a better thing. Jed and Sarah are joining us from Washington, D.C. Welcome, guys. Thank you. Thanks for having us.

Good to have you guys. So you're here to do a debt-free scream. We are. Love it. How much have you paid off? We've paid off $123,000. Wow. Good job.

How long did this take? It took us three years. All right. What kind of debt was this? Mostly law school debt. We're both attorneys. So we both went to law school and both incurred a lot of debt. And then we had some debt from our daughter was diagnosed with a rare illness. And so right around the time that we started, we had several thousand dollars in additional debt from her medical expenses.

Wow. So what's your range of income during this three years household? 80,000 to 190,000. But part of our story was that we started this program because we stopped getting any income. So there was a time there when we were making very close to zero. Yeah, it was really it was really scary. Wow. What happened there? Just job losses. You just had a well, we we work together at a law firm and we got our income based on a percentage of what our clients paid. And then for a short period of time, all of our clients stopped paying at the same time. Wow. Yeah. It was really... We couldn't control it. We couldn't get them to pay. And that really affected our ability to make our bill payments. So is that what jump-started you guys to figure out something has to change? Yeah, April of 2017

we ended up with no income and all the student loan debt and our daughter was hospitalized and we realized we had a $23,000 tax bill and I was pregnant with our fourth child in one month and we were I was so desperate all the time and I thought, this has to be different.

We are, we're too competent and too educated to be this poor and this close to starving. I love it. We're too competent and too educated to be this stupid. Yeah, exactly right. I know exactly how you feel. I felt exactly the same way. I'm too smart to be this broke, but I'm stupid.

Oh, man. Oh, wow. It felt at the time like the worst possible catastrophe. And I think we look back now and we think that was really the hand of God. Yeah. We had been praying for help to do better, you know, in terms of... Be a better steward with our money. How we did with our resources.

And, you know, like he knew what we needed to be put in a place where we would look about and find someone who had some good instructions that we could follow and be put in a place where we would look about and find someone who had some good instructions that we could follow and get us to a place today where we're really in a totally different place. You know, that's the thing about a wake-up call. It wakes you up. Yeah. And you did.

That's the only good thing about it. It woke you up. You don't want to have to go through it. I don't prescribe pain as the only way to learn. I don't believe that. But it is a thorough teacher yeah and having the crud scared out of you will make you never go back yeah there was this moment when i'd done the grocery budget for the week and uh we didn't have any salt in

our kitchen and we couldn't afford any more and we got a notice that one of the clients who said he was going to pay wasn't going to pay that bill that pay period i was sitting on an armchair and my parents basement we lived in my parents basements we didn't have any assets and i just thought this is why people hurt people over money i want to go find people who owe us money and be like my babies need bread oh it was rough oh i love it well you have a never again moment i'll never be back here again that's right that picture is so vivid and you painted it so clearly thank you and you're so it's so vivid i know it's so vivid in your mind you will never forget that day so sarah were you the first one to kind of between the both of you say okay something has to change were you kind of driving it or were you both at a place like who who kind of started it i certainly

was driving it because we were in this terrible situation and my sister and brother-in-law who are much younger than we are they were talking one day and she mentioned that baby step two and i was like what what is that what is that what are you talking about and they began to tell me about the dave ramsey baby steps and i was like wait a second this might be exactly what we need to get out of this situation so i was really pushing it but jed and i have long had differences of opinion about credit cards and so we hadn't ever been able to come to an agreement on how to handle those in our married life um I had always um I had had credit cards for a long time and as a hobby had done the you know which one gives me the better percent back and I had never I had never paid a dime of interest and so

I thought I was ahead and I was winning and it was and you know in some sense i had taken money from the credit card companies but of course when we hit a bad spot all of a sudden we weren't able to pay them off and it accumulated and that was you know it was house of cards comes down that's right i just i remember i was doing my kitchen one night and you shared that quote about how when the tide goes out you can tell who's skinny dipping yeah and i like raised my broom and i was like we're're skinny dipping. So the great thing about the baby steps is that we were able to say that we didn't have to hash out all every part of our debt repayment plan. I could just say, I'm willing to do this whole plan. And Jed said, I'm willing to do it too. And I was like, great. We can join together. We don't have to barter and bargain

about every little thing. We just say, we're to adopt the dave ramsey plan and do that yeah together well that's the beauty of law school it teaches you it teaches you uh principles i mean the law is based on principles yeah absolutely and you can follow the spirit of the law and there's a there's a logical flow chart to things and so when you see something like our plan you adopt it it's your your minds are trained academically to do that yeah that's what it amounts to, because of your training. So that's perfect. So what did that do for your marriage?

Because it sounded like you guys were kind of on different pages. You said you were, you know, sounded like a joint venture or something. Yes, exactly, yes. But getting on the same plan together and going down the same road financially, did that impact your marriage? I think it made a big difference. I think it was really helpful. Because I do think that prior to that, I think back now and it was, you know, it wasn't a thing that we saw eye to eye on and we weren't on the same page. We had

talked about financial things and then we had sort of gotten by even though we kind of did things differently. And it had been a conflict, not a huge one, but you know, it had been like an unresolved issue. And so to now have it be a place of strength. We're like, we have a plan and we are doing it. If we get off track a little bit, then we sit down and we talk about it. We say, okay, what's our plan? Let's go back over what does Dave say about to do with this and this. Then we just

follow it that way. Now it's like we can work on other things knowing that this is something that's taken care of and we don't need to worry about the money piece. That's beautiful. So $123,000 paid off in three years. Congratulations. Thank you. You're heroes.

Thank you. What do you tell people the secret to getting out of debt is? Well, I simply say two things. The first is do what Dave Ramsey says. You know, the closer you can get to following the baby steps. Would you call my wife? Or all his grandchildren. I'm listening. The closer you you can get the faster you will go

we just saw that to be true there were moments in our debt repayment process where we weren't quite doing it sometimes without knowing it and then we were not gaining traction the way we thought we were and we sat down and thought oh wait no, those baby steps tell us to do it this way when we change course

we made so much more progress. It's the fastest way. Yeah. And then the second one I always tell people is to learn to develop a taste for living in reality. There are all these ways in which I had been living in fantasy without even knowing it, you know, like these berries are going to be awesome, even though I can't afford them because it's December, you know, there's ways I sort of told myself that the fantasy life I wanted, which wasn't extravagant, but I couldn't afford it, that it was going to be better than reality. And God is not in fantasy. God is in reality.

So if I want to be with God, then I have to learn to develop a taste for reality. That's a great line. So all the time when I look, if I go to Target and I do a big shopping haul, you know, Target is, well, I got you. The black hole of goodness. And you walk out to the parking lot and know, Target is, I got you, the black hole of goodness. And you walk out to the parking lot and then I'm like, oh my gosh. The red Target of good. I can't afford this basket.

I've learned to develop a preference for going back in and returning it. I feel like a wind in my face like, yeah, I can't afford this stuff. It's going back. And prefer that over the reality in which I bring it home and just pretend like it wasn't on my budget. That's good, you guys. Very strong. Very strong.

I like your statement, the beans and rice, rice and beans. To me, that means, you know, what is it that I need, actually need in order to live, right? That was the question we asked ourselves. And, you know, there's plenty of people around the world who eat beans and rice and they live on that. You know, there's complex protein, there's good carbohydrates, you know, those things are in there. And there's a reason why those are staples around the world. And so, you know, that learning to live sort of fits with what Sarah's saying about reality, learning to live, to look

at what really is what I need rather than sort of what I want or what I, you know, going beyond that. So you guys, I'm sorry to interrupt you. I don't want to run out of time. You guys brought the kids with you. We did. They did the debt-free scream. And it's Reed, Nate, Julie, and Noah. That's right. Here they are. Here they are.

All right. And they're ready. They've been practicing their debt-free scream. Yes. All right. Yeah. Reed, Nate, Julie, Noah, Jed, and Sarah from Washington, D.C., $123,000 paid off in three years, making 80 to 190.

Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free. We're debt-free. Very good job, you guys. Very, very well done. This is The Dave Ramsey Show.

Folks, I love telling you about well-made, well-thought-out products. Today, I'm talking about Grip6 belts. I don't know about you, but I'm not a fan of traditional belts. They never fit right, and they're uncomfortable. Grip6 belts are unique. Owner BJ designed a truly modern, minimalist belt made of high-quality materials with no holes, no flap, and no bulk. And the buckles come in really cool designs and are

interchangeable. I personally own these belts in different styles and talk about affordability, Grip 6 belts come with a lifetime guarantee. And that means if you no longer like or fit the style of your belt, you can replace them for free. Plus, I like the way these guys do business grip six is determined to help build and modernize american manufacturing to learn more and get this month's dave ramsey special visit grip6.com comes from blinds.com find out for yourself why they're the number one online retailer of custom window coverings you get free samples free shipping and with the new promos they run every month you you'll save even more. Always use the promo code RAMSY, and you'll get the best deal. It's incrediblecompanyblinds.com.

Rachel, our question for these guys? Yes, it comes from Scott in Georgia. He says, good morning, Dave. I have a quick question about stockpiling cash while pregnant. I know you always say to stop paying off debt and stockpile, but we are currently two months away of being completely debt-free, and a baby wouldn't be due until January. And we have planned it that we will have a fully funded emergency fund and an extra few thousand to actually pay for the birth by December.

Would you still advise to stockpile this instead of paying off the student loans? We are so dang close. I hear this a lot, though, from people when they when they're in baby step two and their kids all intense. They just want to go, go, go, go, go. They see the math. They see the progress. They're like, we just want to keep going. But, yeah, the advice, Scott, sorry to say, it is just to pause.

And, again, you're not pausing forever. Stay current with the debt, those student loans. But stockpiling that cash, having it there because, I mean, we just talked to a debt-free couple. And they had medical bills that they had to pay. And even you just never know what's going to happen um i've never had a couple have a baby and say i hate it that i had too much money in the savings account when the baby came i've never had that yep so and then the thing is have all that money there at the moment baby and mom come home everyone's healthy everyone's good just write the check and pay it off have your merch i mean you're going to be there and emotionally you could even say we're we're there i mean like gosh like the money's there we know that we we've kind

of hit that that that part in our financial walk but having that cash available during something like this is just i'm a little bit confused by the wording uh i wonder if we got this question a while back baby wouldn't be due until january if you're having a baby in january you would know right now yeah i think that's what he's saying they're pregnant yeah wouldn't i mean it's almost as if they think no i think it would be due yeah okay all right so it says wouldn't i think yeah it does but i mean it would not be well no it would not be due until assuming you're pregnant with grammar assuming you're pregnant and We're not good with grammar. Assuming you're pregnant and not thinking you'd like to be pregnant.

I hear you, I hear you. Yeah, yeah, yeah. That's fair, that's fair. If you're thinking you'd like to be pregnant, we don't stop on that. Yes. We stop when baby's really on the way. That's the thing. So if you really are pregnant, the baby is really due in January, then the first set

of advice that Rachel and I just gave you would stand. Luke is with us in New York. Hey, Luke, welcome to the Dave Ramsey Show. Hey, Dave, how are you? Better than I deserve. What's up? I've been waiting so long to hear you say that to me. So I'm a young guy.

I just graduated college. Congratulations. What's your degree in? Thank you. Actuarial science. Oh, cool. Yeah, I'm a math nerd just like you. Cool. And you said student loans? How much student loan debt? I had 22K and I paid it all off.

Oh, good. So I'm officially debt-free. Yay! Yeah, thanks. But now, obviously, my question is about the emergency fund. So my company offers a 6% match on my 401K, and I'm wondering if I should just utilize that, you know, 6% while I'm filling out my emergency fund just to, you know, get that extra, you know,

it would equate to about $5,000 a year. How long is it going to take you to put an emergency fund together? I can put away about $1,500 to $1,750 a month, so I would say about six months, seven months. What's your income? About

$90. Okay, but you don't have any expenses. You're a single guy straight out of college, right? Well, I pay $2,250 a month per month. I live in New york city so it's not so three to six months of expenses would be like 10 grand yeah yeah exactly okay and you're gonna do that you're gonna do that in like five months yeah yeah or sooner with your income and no yeah you're making 90 taxes in new york kind of kill you yeah i know i know but they

don't kill you i mean you're making 90 and you got you got no bills but rent and taxes yeah and lifestyle yeah yeah i don't have a crazy lifestyle right now yeah and i think luke for you well the advantage well the disadvantage is that you're a math nerd so it's killing you not to take the six percent so i know you're like gosh why can't i just do it yeah so there's that side but also time is on your side and retirement i mean it it's still decades away and so what's harder is when our advice is obviously to pause retirement get that cash in the bank for the emergency fund and then move on to baby step four and usually we're having i'm having to give that advice to people in their 40s or even 50s and like oh like you kind of hate that because you're like, I do want math on your side.

But for you, like, gosh, if you pause for six months, like, you're fine. Like, you're good. So I would just stockpile that cash, have it there, and then press play again on retirement. Losing six months, even at the 6% match, is not going to kill you when you're 65. No. You'll be a millionaire within eight days of when you're going to be anyway. So it's not, you know, you're going to be just fine. Do the stuff in the right order because it lays the foundation before you put the walls up.

And that's what we've got to learn to do. Joe is with us in Arkansas. Hey, Joe, welcome to the Dave Ramsey Show. Alaska. Joe's in Alaska. Yeah, I was wondering if maybe you were talking to a different guy. No, it's been a long minute. How can I help? Oh, I understand. I was wondering if maybe you were talking to a different guy. No, it's been a long minute. How can I help?

Oh, I understand. I understand. So I'm calling from, like you said, up here in Alaska. My wife and I are military up here, and we're getting ready to move in probably July, and I'm going to be driving all the way through to California. My question is, we have a considerable amount of car loan debt. We're thinking about possibly getting rid of one of our cars, getting rid of my truck, because that's the beast in our list of debts.

But the issue being there's to cover the negative equity. Yeah, that's what we usually recommend. How much negative equity have you got? Based on the last offer I got from a dealer, about $17,000. Okay, but that's dealer. You're going to do private sales, so you probably got, what, $13,000, $12,000, something like that. And what do you owe on the truck total? $43,000.

Woo! Yeah, yeah. Okay, so we're trading a $43,000 debt for a $12,000 debt. Yes, that's how I'm seeing it. Yeah, that's what i would do and that still leaves us with my wife's car to be able to drive down through well you can rent a car to drive we can i mean you can rent a car to drive i don't i don't know if i'd trust it on that road okay well but um it's a long long way down there. But, you know, you could find a way to get there.

I mean, we don't keep a stupid $43,000 or $35,000 car to make one trip from Alaska to California. You could find another way to do it cheaper than that. But either way, you can still make it with the plan that you're laying out. And, yeah. By the way, thank you for your service. Appreciate what you guys do. Absolutely, thank you, Dick. Yeah, so. your service appreciate what you guys do thank you do yeah so we we appreciate what y'all do there's a military move to uh california yes sir yes uh we're going to uh the north coast gotcha so okay it'll be a nice climate change yeah i bet i bet from arkansas hey man thanks for the call oh hey those abbreviations are tough i'll be honest with you

you would think uh postal codes you got to know them um the uh uh yeah it's sometimes when we're looking at a big situation like that, we'll use a little thing like that one trip to justify or to offset in our heads this big situation. Yeah. And it's amazing. I mean, what if you just sold everything, bought an airline ticket, and paid for the mover? You'd still come out, even if you didn't want to keep her car. Her car is okay in this situation, I guess.

We didn't get the details on it. But, you know, we'll stipulate that and go ahead. But, you know, just be aware, people, that we all do that. We all rationalize. To justify kind of like making the hard moves because it's hard. It's hard to sell that thing and make it. Nice truck. Yeah, that's why it's going to be hard. Sorry, Joe. Sorry, Joe.

Sorry, Joe. Again, thanks for your service, sir. Rachel Cruz, my co-host this hour. James Childs is our producer. Kelly Daniel is our associate producer and phone screener. I'm Dave Ramsey, and we'll be back. This is James Childs, producer of The Dave Ramsey Show. You can now listen to The Dave Ramsey Show on Spotify, Pandora, or anywhere you listen to podcasts.

For all the ways to watch and listen, check out our show page at DaveRamsey.com slash show.